Sterling initially had a good start to 2015 against the Euro, hitting highs of over €1.29 on Friday. As has been the case of late however, when it tested these highs it quickly dropped back away again. Against the US Dollar, the Pound has fallen to its lowest in well over a year. Let’s take a more detailed look at what’s been happening.
The Euro is fundamentally weak at the moment, and this is reflected in its value. Over the New Year, comments from the European Central Bank president Mario Draghi indicate they are getting closer to a Quantitative Easing stimulus programme. This weakened the single currency and made it cheaper to buy. There are also the Greek elections later this month, with a strong chance the anti EU party could win. This also raises questions about a possible Greek exit from the Eurozone, and this is also keeping the Euro on the back foot, pushing GBP/EUR rates to above €1.29 last week:
The gains were short lived as is often the case. With the New Year, came concerns over the Pound, and Sterling has weakened in the first few days trading. Much of this is probably due to the political uncertainty the upcoming election will generate, with the result quite open at the moment. This coupled with the fact that UK interest rates aren’t likely to rise for at least 6 months mean the Pound could be facing further pressure in the coming weeks.
Longer term, I expect Pound/Euro to break the €1.30 barrier, probably in the latter part of this year. In the shorter to medium term however, those that need to buy or sell Euros should weigh up their options now, as a small movement in the wrong direction could cost you a significant sum. If you need to buy or sell Euros in the next 3 to 6 months, contact me today to find out what could happen, what your options are, and obtain a quote on the rates that I can offer you.
The downward trend for cable continues. The rate fell to $1.53 yesterday, and today has fallen below the $1.52 mark which is the lowest it’s been since August 2013. The main reason for this is Dollar strength, caused by uncertainty in the global oil markets, unrest in Ukraine and the Middle East, and a robust US economy that is going from strength to strength. The drop could continue, but I think the rate will struggle to drop below the $1.50 mark as this is a key technical level.
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